South Korea's chemicals and electronic materials maker, LG Chem, will invest 3 trillion won ($2.5 billion) by 2018 in an LCD glass production facility, its parent group said on Wednesday.

LG Chem, a sister company of the world's second-largest LCD panel maker, LG Display Co Ltd, broke ground for a new LCD glass substrate plant in Paju, north of Seoul, in which the company plans to build seven production lines for LCD glasses.

The spending plan was higher than previously stated plans, for investment of 430 billion won on liquid crystal display (LCD) glass production until March 2010.

It also came after an earthquake last month disrupted glass production in Japan and stoked concerns that shortages could intensify.

In a statement filed with the stock exchange, LG Chem said it expects the investment will help it expand its market share.

The country's top chemicals maker expects to begin production at the facility in early 2012 and post more than 2 trillion won ($1.7 billion) of sales in 2018, with an annual output of more than 50 million square metres of glass substrates a year.

LCD glass is a core component in LCD production, accounting for more than 20 percent of costs.

A shortage in glass substrates has constrained output in the LCD sector and pushed up panel prices. Glass suppliers have been slow to boost production after a slump in flat panels last year.

The display industry is recovering from a severe downturn, with government stimulus packages around the world helping to boost demand for televisions and computers.

Meanwhile, LG Innotek will spend 1 trillion won through 2012 to start mass production of LED (light-emitting diode) packages in May and generate 1.5 trillion won in sales, the company said in a separate disclosure to the stock exchange.

The firm hopes the investment will help it acquire more than a 10 percent share of the rapidly-expanding global LED package market.

Shares of LG Chem lost 0.2 percent to 245,500 won, and shares of LG Innotek gained 1.71 percent to 149,000 won as of 0253 GMT, while the broader market lost 0.51 percent.

($1=1196.0 Won)

(Reporting by Kim Yeon-hee and Cho Meeyoung; Editing by Ken Wills) ($1=1194.8 Won)

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